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Interviews & Media Appearances

 

INTERVIEW given for WWW.BUGETUL.RO by the President of the ASF, Mr. Leonardo Badea

 

30.07.2018

 

 

 

How would you characterize the first year of your mandate as president of ASF?

My first year of heading the ASF was a real professional challenge. From the beginning I proposed myself, to not deviate in any moment from the principle on which I rely myself very much: observing  the rights and interests of consumers of non-banking financial services. I believe that the citizen must always be at the center of our concerns. And the best example in this respect is the new legislative framework that governs the civil liability insurances market. The mechanisms and provisions introduced into the legislation were designed to come both in support of the one concluding the policy and of the beneficiary of the policy. And I would just list some of these: the direct settlement clause, the reference tariff, the high-risk customer concept. ASF has also made available to insurers an online application that can be accessed on www.asfromania.ro, through which the holder of a civil liability insurance policy that can achieve information about the classification into bonus-malus  (B / M) category of  the insured vehicle. At the same time, we aimed to strengthen the institutional capacity as a whole, by confirming the main goals undertaken: strengthening the markets supervised and increasing their competitiveness, by creating a regulatory framework in line with the European standards, given the implementation of risk-based supervision mechanisms and a preventive approach. Throughout this period, we had a laborious draft of legislative changes on all the three supervised markets. Also, this year we began a structured dialogue with institutions from the United States that have a similar object of activity to ASF. Moreover, since autumn this year, we will hold a series of trainings for our specialists with representatives of the institution regulating the USA capital market.

You referred to the legislative changes which goals is represented by ASF, which were these?

This year there have been no less than four normative acts related to the primary legislation, drafted by ASF with the support of the Parliament of Romania and a wide interministerial staff,which were enforced by law:

  • Law no. 24/2017 on Issuers of Financial Instruments and Market Operations - provides the implementation of MAD and Directive 2013/50 / EU on the harmonization of transparency obligations as regards information on issuers which securities are allowed to trading on a regulated market;
  • Law no. 29/2017 for the amendment and completion of GEO no. 32/2012 on undertakings for collective investment in transferable securities and investment management companies, as well as for amending and completing the Law no. 297/2004;
  • Law no.132 / 2017 on the mandatory civil liability insurance in respect of damages caused to third-parties by vehicle and tramway accidents, which covers the scope of the civil liability insurance, but also the organization and functioning of the Romanian Car Vehicles Insurers' Bureau (BAAR);
  • Law no. 126/2018 on financial instruments markets. The main purpose of the law is the transposition of the MIFID II Directive (2014/65 Directive), the main goals aim to improve the investors’ protection, to increase the market transparency by expanding pre and post-trading requirements, to promote competition in trading and clearing. By enforcing law there are introduced a number of novelties such as: the possibility for the interested operators to establish a new trading place - the organized trading system; the establishment of new entities as a result of the extension of transaction reporting obligations; definition of some new concepts in line with the latest technical developments in the field of trading with financial instruments - algorithmic trading, high frequency algorithmic trading; extending the list of financial instruments with a new category - greenhouse gas emission certificates and derivatives relying on them.

But not only that, complementary to primary legislation, ASF has developed a large volume of normative acts related to the secondary legislation, applicable to all three financial supervision sectors, aiming at amending and / or completing the regulatory framework and aligning it to the European legislation and practice or at addressing some issues raised in the monitoring process of ASF-supervised markets. Thus, a number of 15 normative acts were issued in 2017 and 17 other regulations and rules were enforced during the first half of 2018, a number of 7 projects being ongoing the process of public consultation and analysis.

Which have been the measures taken in order to boost investors’ trust in the Romanian capital market?

  • Strengthening the supervision of non-banking financial markets and convergence of common supervision practices applicable to the three sectors still represents one of the strategic goals of ASF to maintain investors’ trust and to provide the financial stability. To this end, the following two assistance projects to strengthen supervision in the capital market and namely in the insurances-reinsurances sector are being developed and shall be implemented within the organizational structures:
  • Assistance project on Strengthening the Supervisio of the Capital Market, aiming to develop the supervisory tools of investment companies and fund managers. This project was carried out with the support of the World Bank and of the European Commission and was funded by European funds, being completed during the first half of 2018. By applying the methodologies provided in the supervisory user guides drafted, it is intended to strengthen the off-site supervision of conduct for investments companies and fund managers with a view to early detection of risk areas at both individual and market levels, as well as strengthening the on-site supervision (control) as a tool to detect and monitor issues both from the point of view of conduct and of prudence.
  • The Technical Assistance Project on Strengthening the Supervision of the Insurance Market in Romania, aiming at strengthening the supervision function of insurance companies, from the point of view of prudence and conduct, through the efficient use of off-site and on-site supervision tools, respectively by monitoring the risk profile of each insurance company.

How does ASF help to the stability and healthy operation of the sectors you supervise?

In order to provide the stability and proper functioning of the three financial sectors regulated and supervised, ASF has conducted an analysis of the way how some risks could be spread throughout the financial sector. It was essential for us, at ASF level, to identify, assess and to draft a picture of the main risks. Thus, we were able to analyze their impact on the markets, activities and institutions supervised and we have set the necessary measures to diminish, mitigate or eliminate them. Special attention was paid to applying and assessing the macro-prudential strategy of ASF by monitoring the systemic risks and implementing the macro-prudential policies at the level of the three non-banking financial sectors.

How did you reorganize the cyber security field once with GDPR? Which were the measures taken for data security and protection?

At ASF level, the cyber security activity was reorganized by setting up the Cyber Security Service, which aims to provide the technical framework for protection of data from the own computer system by implementing and monitoring the technical measures necessary to accomplish this goal. ASF has also enforced specific measures to ensure the compliance of institutional procedures and practices with the new regulatory provisions of Regulation (EU) 2016/679 on the protection of individuals with regard to the processing of personal data and on the free movement of such data and  for repealing Directive 95/46 / EC (GDPR).

What is the role of  ASF and how is your institution preparing for the Romanian Presidency to the EU Council that will be carried out from 1 January 2019?

ASF has a well-defined role in this entire process extremely important for Romania, which is why we will assign an increased number of experts for the negotiation files targeting the non-banking financial market and we have intensified the contribution activities on the files, including on participation to working meetings from Brussels. Given the context that the financial services sector is marked by the need for progress towards completing the Banking Union and the Union of Capital Markets, this sector is represented by an intense activity. Currently, ASF contributes to  a number of 12 legislative files and considers assigning resources for two other files, the  sustainable funding and the SME financing.

How does the Financial Supervisory Authority engage in consumer’s protection and financial education? What projects do you have implemented on these areas?

The Financial Supervision Authority is one of the few institutions of public interest from Romania that has a modern tool for measuring the consumers’ satisfaction level (NPS methode), achieving a score of over 95% consumers satisfied as a result of the quality of the information provided both by phone and by the presence to the headquarters of the Authority. Transparency and facilitation of non-discriminatory access to information are provided through a dedicated public relations service within which operates a modern Call Center that has a TELGREEN line (free call for the consumer) that allows the efficient handling of calls received from them. This system optimizes the consumer's waiting time, prioritizes the call depending on the area of ​​interest, and provides an easy access to information. Thus, consumers have access to fast, modern information through telephone options that enable them to access the information related to each of the three financial supervision sectors.

For exemplification, for the second semester of 2017 and the first semester of 2018, the ASF Call Center has received more than 12.503 calls, among which:

  1.  Information regarding the Insurances - Reinsurance Sectors - 6573 calls
  2.  Information on the Private Pensions Sector - 3095 calls
  3.  Information on the Financial Instruments and Investments Sector - 433 calls
  4.  Other information - 1727 calls
  5.  Alternative Disputes Settlement Entity - 643 calls
  6.  Requests sent in English language - 32 calls

As far as financial education is concerned, ASF, in partnership with ASE, has hold in April 2018 a series of scientific conferences and seminars during which a series of  topics of interest for the non-banking financial market were debated. The events were attended by some renowned university professors from the country and from abroad. At the same time, ASF and ASE collaborate within "Academic Laboratory", the ASF Program aimed at developing financial education in the university environment. This project involves interactive discussions between ASF lecturers and students, to whom are submitted comparative analysis between the different practical elements and specific technical concepts underpinning non-banking financial markets. Also, within this program, students have completed internships in ASF.

At the same time, with the occassion of Global Money Week (GMW), during a whole week, events within the global financial market have been held worldwide, and from Romania did not miss from the ones who have held such actions, a series of actions and events designed to improve the level of financial education at the population level, including at the level of pupils and young people, being initiated by ASF.

How does  ASF activity is carried out within international bodies and with what results?

This year,  ASF contributes to the achievement of the priority goals set by EIOPA and ESMA, assigning important resources for activities related to the harmonization of national financial policies and the convergence of the supervision mechanisms of the European financial system. As member of international bodies in the field of non-banking financial markets, ASF participated in 2018 to working groups and contributed to IOSCO activities - International Organization of Securities Regulators, IAIS - International Association of Insurance Supervisors and IOPS – International Organization of Supervisors in Pensions. Between 27-29 June 2018, ASF hosted in Bucharest the 17th meeting of IFREFI, the Francophone Institute for Financial Regulation. The topic of debate  for  the three days, including the public conference from 27 June 2018, was represented by financial innovation, with a focus on the role of supervisory authorities and the significance of consumers’ protection. IFREFI is a dialogue and cooperation structure which main goals consist in the exchange of information and experience and was established in June 2002 following the initiative of the French financial regulation authority.

Which are your future projects?

ASF has many significant goals for the coming years, both in terms of strengthening the institutional capacity and regarding the  strengthening and developing markets.

Of these, in institutional terms, I want to promote within ASF the incorporation, more and more,  of modern technologies and digitization, to reduce bureaucracy, to improve the circulation of information between departments. All this should lead us to a more efficient, risk-based and integrated supervision, while decreasing the response times in relation to industry, more promptitude in authorization processes and generally an attitude of ASF employees at all levels, more oriented towards consumer and towards market development. I believe that this way we will achieve an increase in the voluntary compliance level of the entities with the rules and best practices in the field, as a result of decreasing the administrative and bureaucratic pressure.

For the development of the capital market, I will give a special support and significance to the project on the establishment of a Romanian central counterpart, built on solid and long-term perspectives, which may have inclusively a regional role over time. We will also be very seriously involved in the project on solving the issues related to the inactive accounts on the Romanian capital market, for which we benefit from EBRD assistance.

An important goals for ASF consists in the development of the voluntary pensions segment. Due to many reasons, both structural and conjunctural, its evolution has been modest until now, although the significance it could have had in the economy and for providing a proper income of participants on retirement are much higher. Given this context, I am considering a series of projects designed to increase the number of participants and contributions to the third pillar of pensions. We will take  information steps on the benefits of contribution to the supplementary pension, in order to boost the attracting of new participants, especially among young employees. We also aim to increase the attractiveness of the third pillar by reviewing regulations on the investment policy and even by proposals regarding the tax treatment of these contributions.

As the insurance market remains dominated by the civil liability insurances policies, while boosting the development of the other business lines (eg life, medical, agricultural insurances, etc.), I will continue to pay a special attention to changes to the law on the civil liability insurance, with the aim of strenghtening and maintaining the market stability and the protection of insurers’ rights, through public debate, together with all those involved.



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